Computation For Your W-2 Wages Using a Paystub
Often, people do not begin with the tax process if there is no W2 yet. After all, the W2 form contains the information that you will need in preparing your tax return. What if your W2 is not yet with you? You do not have to wait for it. There are actually relevant information in your W2 that can be found in your paystub. We will teach you how to calculate W2 wages using your paystubs in this page.
The check that you receive when you get paid is called a paystub at https://www.paystubcreator.net/blog/how-to/how-to-calculate-w-2-wages-from-a-paystub. The paystub contains details about your pay, like the total amount of money you will be receiving as of the current pay period and as of the year-to-date payroll. It also shows the deductions and taxes that will be reduced from your earnings. Considering this, the paystub lists the net earnings of employees or the amount they will actually receive.
A W-2 is a tax form that contains details about the taxes withheld from your paycheck for the year. This is important in relation to filling out your tax return.
How Do you Calculate W-2 Wages Out of a Paystub?
Since you W-2 form lists the taxes withheld from your paycheck, it also tells how much net income you’ve earned for the year however, waiting for it is not your only option especially that you can compute for your W2 wages using your paystubs. The paystub may not contain all information present in a W2 form but, it contains all sufficient information necessary for calculating your overall net income. Here are the steps to do it. Start now!
1. Find your Gross Income.
The first step is calculating your gross income which is the amount you have earned without all the deductions and tax withholdings. Gross income is usually equal to the hourly rate multiplied by the number of hours worked in a week. The paystub has this also including your overtime hours, bonuses, and commissions.
Deduct Wages That Are Non-Taxable.
After you got your gross income. You should deduct from it the wages you received that are non-taxable. These non-taxable wages are the wages you’ve earned that do not have income taxes, federal taxes, or state taxes due. Wages like these are disability wages, partnership income, employer insurance, or gifts. Look for more facts about paystubs at https://www.encyclopedia.com/science-and-technology/computers-and-electrical-engineering/computers-and-computing/stub.
3. Determine Other Deductions.
Mostly, there are people who can avail of pretax deductions so as to decrease their taxable income. Life insurance, retirement accounts, transportation programs, employer benefits, and health benefits are examples of pretax deductions. The total amount of these deductions can be found on your paystub.
You subtract the total amount of pretax deductions from the total amount you have derived in step 2. This amount should be comparable to the amount in Box 1 of your W2 form.
4. Compute Your Annual Taxes.
Multiply the number of times you get paid every year by the total amount of local, state, and income taxes that have been withheld. For example, if you are paid twice in a month, then you will multiply 24 by the total amount of taxes withheld. At year end, the product is the amount of taxes that will be withheld.
5. Compute Your W-2 Earnings.
Lastly, subtract the total amount of taxes withheld from the amount you got in step three to get the net income.